Governor's speech: Fix the budget now

State of the State: In a terse speech, Schwarzenegger forgoes grand visions, urges lawmakers to end financial impasse

Published 4:00 am, Friday, January 16, 2009

Photo: Mike Kepka, The Chronicle

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Acknowledging a grim fiscal picture for California budget issues, Gov. Arnold Schwarzenegger gives his State of the State speech in the assembly chambers of the State Capitol building on Thursday in Sacramento.

Acknowledging a grim fiscal picture for California budget issues, Gov. Arnold Schwarzenegger gives his State of the State speech in the assembly chambers of the State Capitol building on Thursday in Sacramento.

Photo: Mike Kepka, The Chronicle

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Gov. Arnold Schwarzenegger delivers his State of the State address before a joint session of the Legislature at the Capitol in Sacramento, Calif., Thursday, Jan. 15, 2009. Seated at right is Senate President Pro Tem Darrell Steinberg. (AP Photo/Rich Pedroncelli) less

Gov. Arnold Schwarzenegger delivers his State of the State address before a joint session of the Legislature at the Capitol in Sacramento, Calif., Thursday, Jan. 15, 2009. Seated at right is Senate President ... more

Photo: Rich Pedroncelli, AP

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Gov. Arnold Schwarzenegger greets members of the California State Assembly as he walks into the Assembly Chambers to give his State of the State speech on Thursday in Sacramento.

Gov. Arnold Schwarzenegger greets members of the California State Assembly as he walks into the Assembly Chambers to give his State of the State speech on Thursday in Sacramento.

Photo: Mike Kepka, The Chronicle

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Vera Barter, of Sacramento (center with blue sign), joins other disabled rights advocates protesting state budget cuts outside the State Capitol after Gov. Arnold Schwarzenegger gave his State of the State speech on Thursday morning. less

Vera Barter, of Sacramento (center with blue sign), joins other disabled rights advocates protesting state budget cuts outside the State Capitol after Gov. Arnold Schwarzenegger gave his State of the State ... more

Photo: Mike Kepka, The Chronicle

Governor's speech: Fix the budget now

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With cash-strapped California weeks away from issuing IOUs instead of tax refunds, Gov. Arnold Schwarzenegger warned in an unusually terse State of the State address on Thursday that the Legislature must agree on a budget solution before the state faces insolvency.

The governor's address, which lasted less than 12 minutes, centered on California's immediate fiscal crisis, avoiding the traditional unveiling of his goals and priorities for the year.

It came as the state's financial leaders face dwindling cash reserves and are gearing up to withhold tax refunds and other payments beginning Feb. 1.

"Addressing this emergency is the first and greatest thing we must do for the people," Schwarzenegger told the joint legislative session of the Assembly and the state Senate. "The $42 billion deficit (through June 2010) is a rock upon our chest, and we cannot breathe until we get it off."

The governor's decision to give a short, pointed speech was a shrewd political move because it focused attention on the state's most-pressing issue while avoiding specifics and giving his critics little to respond to, one Capitol pundit said.

The times don't allow for a typical State of the State address, the governor said.

"It doesn't make any sense to talk about education, infrastructure, water, health care reform and all these things when we have this huge budget deficit," he said. "I will talk about my vision for all these things ... and more ... as soon as we get the budget done."

The state government has been in a financial free fall since Schwarzenegger declared a fiscal emergency last January when the mortgage meltdown rapidly reduced tax receipts for the state. In November, just weeks after he signed a budget for the current year - 85 days late - the governor declared another fiscal emergency, which he and legislative leaders have been unable to resolve. On Dec. 31, he unveiled his latest proposal to solve the mess: a budget plan that would close the estimated $42 billion deficit in the next 18 months.

In his speech Thursday, Schwarzenegger blamed a Legislature split by partisan and ideological fissures for failing to come to grips with a budget devastated by the forces racking the state and national economies.

"Conan's sword could not have cleaved our political system in two as cleanly as our own political parties have done," the governor said, referring to a pair of movies he made as an action-film star. "Over time, ours has become a system where rigid ideology has been rewarded, and pragmatic compromise has been punished."

At the same time, the governor tried to offer some optimism in solving the state's fiscal crisis, telling lawmakers he came to "simply encourage this body to continue the hard work you are doing behind closed doors."

"I know we'll get it done," he said.

Assembly Republican leader Mike Villines of Clovis (Fresno County) disagreed that the budget impasse has been driven by ideology.

"We, as a policy matter, believe this state overspends money, that taxpayers are overtaxed, and we don't do a particularly good job of auditing and managing the darn money once it goes out," he said.

"He didn't really say much of substance about how he wants to solve the current financial crisis, which I was very disappointed in," she said. "But on the other hand he certainly set a more positive tone and that gives me a little bit of hope that there's an opening there for us to work together."

There was little applause on the Assembly floor after Schwarzenegger's stark description of where the state stands. The legislators sat grim-faced when the governor called for a measure that would suspend all pay for the Legislature and the governor if a new state budget was not passed by the June 15 deadline, something that has happened only a handful of times in recent decades.

"If you call a taxi and the taxi doesn't show up, you don't have to pay the driver," Schwarzenegger said. "If the people's work is not getting done, the people's representatives should not get paid either."

Some lawmakers were opposed to the idea.

"It just seems to me that it would be inappropriate to add a penalty just because (the budget) isn't out on time," said Senate Republican leader Dave Cogdill of Modesto. "Is that what the people want? A budget regardless of its quality as long as it's on time? I doubt that."

Senate President Pro Tem Darrell Steinberg, D-Sacramento, said that would be a moot point if Schwarzenegger and the Legislature are successful in quickly solving the nearly $42 billion gap.

"If we pass this budget in the next two weeks, it would be the earliest state budget in state history, and his suggestion would not be necessary," he said.

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